How I Became a Manufacturing Skeptic (Dani Rodrik, 5/12/26, Project Syndicate)
In recent years, I have become skeptical about the viability of the traditional industrialization-led growth model. I have argued for a different model of economic growth, emphasizing the development of productive capabilities in labor-absorbing, mostly non-tradable services. I have warned policymakers in Africa and other developing regions that trying to emulate the East Asian model would produce, at best, manufacturing enclaves, with a tiny sliver of productive firms integrated into global value chains while the bulk of the labor force remains stuck in low-productivity activities.
Mexico exemplifies this outcome. As Santiago Levy, a former Mexican deputy minister of finance, pointed out at the same conference, Mexico’s exports of manufactured goods have increased more than tenfold since the country joined the United States and Canada to form the North American Free Trade Agreement (NAFTA) in 1994. At the doorstep of a giant market and with policymakers determined to promote foreign trade and inward investment, few countries were blessed with better circumstances for export-oriented industrialization. Yet Mexico’s overall economic performance has been dismal, even by undemanding Latin American standards, with a declining productivity trajectory.